Updated 12:17 am, Saturday, September 14, 2013

Scott Hammer and Eric Raines, with the FDIC at The Community's Bank...

Bank customers Carol Loschiavo, left, with her daughter Laura Giacobbe and grandson Stefano, look on in shock at the activity around the sudden closing of The Community's Bank in Bridgeport, Conn. on Friday September 13, 2013.
Photo: Christian Abraham

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What happens next?If you had money in the The Community's Bank: Customers should call the FDIC toll-free at 1-800-430-6165 if they have questions. The phone number will be in service Saturday from 9 a.m. to 6 p.m., Sunday from noon to 6 p.m., Monday from 8 a.m. to 8 p.m. and thereafter from 9 a.m. to 5 p.m. Customers can also check the FDIC's website at http://www.fdic.gov/bank/individual/failed/commbank-ct.html.Beginning Monday, depositors of The Community's Bank with more than $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at http://www2.fdic.gov/dip/Index.asp to determine their insurance coverage.

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BRIDGEPORT -- For nearly a decade, The Community's Bank sat at 2574 East Main St., the only minority-owned bank in Connecticut.

On Friday, it became the first community bank in the state in almost a decade to fail.

Notices plastered on its windows wrote the bank's obituary as State Police cruisers blocked access to the drive-up window. Inside the locked bank, officials from the Federal Deposit Insurance Corp. and the State Banking Department began the task of shutting it down.

"The bank is closed for business," said Eric R. Raines, who with Scott Hammer, both FDIC ombudsmen, arrived from Washington Friday afternoon. "It will be open from 9 a.m. to 6 p.m. Saturday and Sunday, but only to allow customers to clean out their safety deposit boxes and to get questions answered."

During that time, customers will not have access to their accounts or be able to transact any business. On Sunday, Raines said, the FDIC will mail checks containing the entire amount in a customer's account to the address on record with the bank. Customers can expect to get their checks by Wednesday.

As of Friday, the bank had approximately 1,064 accounts containing about $25 million.

One of those customers, Ocie Lowe Jr., showed up just around the time the bank closed.

"I've been going here a long time," said Lowe, a Helen Street resident. "It's sad, but it's no hardship."

"The closing of this bank means our minority community, which oftentimes does not have the same access to credit as others do, is now bereft without this bank's focus on providing access to credit or capital," Finch said in a prepared statement. "I will be writing to the Banks Committee of the Legislature, urging them to investigate this loss of a source of capital to Bridgeport individuals and businesses and asking them how we can change the laws to improve access to capital in minority communities and assure this never happens again. The state of Connecticut needs to do a better job of getting investments into small businesses like the ones served by The Community's Bank."

Still The Community's Bank had been teetering on the edge of insolvency for some time.

In 2010, the FDIC and The Community's Bank reached a regulatory agreement in which the bank promised to increase its capital ratios, review its management structure and reduce the concentration of its loan portfolio on commercial real estate, especially multi-family homes. The bank had to provide a series of reports to the FDIC on how it is progressing on these issues.

In March, the FDIC sent it notice to raise its capital or meet stringent requirements for approving loans. Once it couldn't approve loans, its prospect of generating income greatly diminished.

"The only two years it made a profit was 2004 and 2009," said Raines. He explained those came from things non-recurring sources like the sale of assets.

The bank opened in 2001 with much fanfare and three branches. It was founded by Peter Hurst, a black lawyer and Wall Street banker, and had branches in Bridgeport, Bloomfield and Hartford and $90 million in deposits. While Hurst went on to become the 2004 Barnum Festival ringmaster, his bank appeared to be spiraling downward. In 2003, the Hartford branch was consolidated with Bloomfield. In 2004, Bloomfield was sold to the Windsor Federal Savings and Loan Association. That left only Bridgeport.

Friday's commotion outside that branch attracted the attention of Laura Giacobbe, who lives across the street in a house owned by her mother, Carol Loschiavo of Fairfield. Both were longtime bank customers. Both were shocked when told the bank had failed -- throwing its 14 employees out of work.

"I can't believe it," said Loschiavo. "No one ever said anything."

"It was so convenient for me just being across the street," said Giacobbe holding her six-week-old baby, Stefano. "Everyone was very nice there. I never had a problem.'

But inside there was a consistent problem, particularly "management's inability to develop a profitable business plan," said Raines.

A snapshot of the bank's troubles could be viewed by looking at its last two financial reports.

From June 30, 2012 to June 30, 2013, the bank's assets dropped from $33 million to $26 million and its capital sank from $1.5 million to $300,000, according to the FDIC. Meanwhile its profit margin dropped from negative $244,000 to negative $1.4 million and its troubled assets rose from nearly $1.7 million to $2.1 million.

"The Banking Department worked diligently to find ways to allow for the continued operation of The Community's Bank," said Howard F. Pitkin, the state's bank commissioner. When that didn't happen and it was the clear the bank could not raise capital, the closure was ordered.

"My primary responsibility is to the protection of Connecticut consumers, and in this case specifically, the depositors of this institution," Pitkin said.

In his prepared statement, Finch promised to work "aggressively with Commissioner Pitkin to find another bank and lender to move into The Community's Bank's existing location in the Beardsley Park neighborhood as soon as possible."

The Community's Bank is the 21st FDIC-insured bank to fail in the country this year. It is the first in Connecticut since 2002, when the Connecticut Bank of Commerce closed.

Anyone with questions about the bank or retrieving their assets may call the FDIC at 1-800-430-6165 Saturday from 9 a.m. to 6 p.m., Sunday from noon to 6 p.m. or Monday from 8 a.m. to 8 p.m.